India's domestic air passenger traffic fell 2 per cent year-on-year in April 2026 to 140.8 lakh passengers, weighed down by geopolitical disruptions stemming from the escalating West Asia conflict, according to a monthly aviation sector report released on Friday, 29 May 2026. The decline marks a reversal from the modest growth trajectory the sector had maintained through much of the previous financial year.

Key Traffic Figures

Domestic traffic in April 2025 had stood at 143.1 lakh passengers, making the year-on-year shortfall approximately 2.3 lakh passengers. On a sequential basis, traffic was also down 2 per cent from the 143.7 lakh passengers recorded in March 2026. Airlines trimmed capacity in tandem — deployment in April 2026 was 0.6 per cent lower than the year-ago period and 1.4 per cent lower than March 2026, suggesting carriers anticipated softening demand rather than being caught off-guard.

For the full financial year FY2025-26, domestic air passenger traffic totalled 1,677.4 lakh passengers, registering a modest year-on-year growth of 1.4 per cent — in line with the rating agency's projected band of 0–3 per cent growth.

International Traffic Falls Short of Estimates

International air passenger traffic for Indian carriers grew 3.9 per cent to 350 lakh passengers during FY2026, considerably below the agency's earlier forecast of 7–9 per cent growth. The shortfall is largely attributed to airspace closures and flight curtailments linked to the West Asian conflict. Notably, some airlines have already announced reductions in international flight operations due to demand disruptions and escalating operating costs.

The agency cautioned that this could reverse the gains in international seat capacity share that Indian carriers had achieved during FY2026 — a hard-won expansion that took several quarters to build.

Outlook Revised to Negative

The rating agency had revised its outlook on the Indian aviation industry to 'Negative' from 'Stable' in March 2026, citing three converging pressures: higher aviation turbine fuel (ATF) prices, depreciation of the rupee against the US dollar, and disruption in international airspace availability. The agency warned that flight cancellations, airspace closures, and rising airfares driven by fuel surcharges are likely to continue weighing on passenger traffic growth in the coming months.

Airfare Cap Removal Adds Uncertainty

The Directorate General of Civil Aviation (DGCA) removed airfare caps that had been introduced in December 2025, a move that could allow airlines to pass on higher costs to passengers. According to the report, demand could soften meaningfully if ticket prices rise sharply — creating a difficult balancing act for carriers already managing elevated fuel and currency costs.

This comes amid a broader pattern of post-pandemic aviation recovery losing steam globally, with Indian carriers now facing a confluence of external shocks that were largely absent during the FY2024 and FY2025 rebound. How quickly the West Asia situation stabilises will be a key determinant of whether the sector can return to higher single-digit growth in FY2027.